Salesforce.com 2009 Annual Report Download - page 5

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Table of Contents
We market our service to businesses on a subscription basis, primarily through our direct sales efforts and indirectly through partners. Through our
Force.com platform and developer tools and our AppExchange, we also encourage third parties to develop additional functionality and applications that run
on our platform, but which are sold separately from, or in conjunction with, our CRM service.
Cloud Computing
Cloud computing fundamentally changes the way enterprise business software applications are developed and deployed. Application developers no
longer need to create and manage their own infrastructure of servers, storage, network devices, operating system software and development tools in order to
create a business application. Instead, the entire infrastructure is managed by third parties who specialize in infrastructure management, and developers simply
use an Internet browser to access the development environment. Application users can gain access to a variety of business applications via an Internet browser
or mobile device, and are able to take advantage of a robust, secure, scalable and highly available application at a relatively low cost, without the cost and
complexity of managing the application.
Our vision of enterprise cloud computing is based on a multi-tenancy technology architecture and a subscription service business model. With multi-
tenancy, multiple customers share application, platform and infrastructure services provided by the vendor. Subscriptions allow customers to pay a set amount
over a contract period versus the relatively high upfront costs associated with traditional software.
Cloud Applications (formerly referred to as "Software-as-a-Service" or "SaaS")
Cloud applications enable businesses to subscribe to a wide variety of application services that are developed specifically for, and delivered over, the
Internet on an as-needed basis with little or no implementation services required and without the need to install and manage third-party software in-house.
Historically, only large businesses could afford to make investments in enterprise resource planning and CRM applications to gain an enterprise-wide
view of business information and automate and improve basic processes. However, cloud applications are available to businesses of all sizes and across all
industries. Multi-tenant architecture enables cloud vendors like us to leverage a common infrastructure and software code base across all of our customers
who benefit from access to the most current release of the application, automated upgrades, more rapid innovation and the economies of a shared
infrastructure.
We believe the shift to cloud applications provides significant benefits even beyond those associated with multi-tenant infrastructure. Businesses are
able to realize many of the benefits offered by traditional enterprise software vendors, such as a comprehensive set of features and functionality and the ability
to customize and integrate with other applications, while at the same time reducing the risks and lowering the total costs associated with owning enterprise
software. As a result, we believe the continued emergence of cloud applications is bringing about a fundamental transformation in the enterprise software
industry as businesses are offered the choice of replacing their purchased software with subscriptions to a wide range of application services.
Cloud Platforms (formerly referred to as "Platform-as-a-Service" or "PaaS")
We believe that cloud applications and their related success in the market are the most widely understood segment of enterprise cloud computing.
However, enterprise cloud computing also includes building cloud applications on an application development platform. This market is called the cloud
platform market.
Application developers use cloud platform technology to build both custom applications for individual businesses or vertical industries, and horizontal
applications to address standard business processes that can be sold to a broad range of potential customers. Application developers include corporate
information technology
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